FL TAX: WHEN EVERYONE IS INJURED BUT NOBODY CAN SUE

WHEN EVERYONE IS INJURED BUT NOBODY CAN SUE

ANALYSIS OF SPECIAL INJURY TAXPAYER STANDING IN FLORIDA COURTS

The Florida Supreme Court accepted jurisdiction to review a case from the Fourth District Court of appeal in 1985. The decision in the case is well known by Florida taxing authorities and used as a shield against challenges to lawsuits on the basis of Standing ( the right to be in court). The decision in North Broward Hospital District v Fornes, 476 So.2d 154 ( Fla. 1985) framed the question of great public importance as the following:

Does a taxpayer who alleges that the taxing authority is acting illegally in expending public funds, which will increase his tax burden, have standing to sue to prevent such expenditure, or is it necessary that he suffer some other special injury distinct from other taxpayers (as opposed to other inhabitants) or launch a constitutional attack upon the taxing authority’s action in order to have standing?

Unfortunately for taxpayers, the answer was no, the taxpayer did not have standing. The procedural history of the case was based upon a dismissal at the trial court and a reversal of the dismissal on appeal with certification of the issue to the Florida Supreme court. The trial court granted the District’s motion to dismiss, citing Godheim v. City of Tampa, 426 So.2d 1084 (Fla. 2d DCA 1983). The Fourth District Court of Appeal reversed and held that Fornes as a taxpayer within the District had standing to sue to prevent the illegal expenditure of public funds by alleging that the expenditure will increase her tax burden. The Florida Supreme court opinion cited earlier ( 1941) precedent by the court to answer the questions posed in the negative. It stated:

We disagree with Fornes. Since this Court's decision in Henry L. Doherty & Co. v. Joachim, 146 Fla. 50, 200 So. 238 (1941), we have consistently held that a mere increase in taxes does not confer standing upon a taxpayer to challenge a governmental expenditure. In that case, we stated:

Both parties seem to recognize the rule announced in Rickman v. Whitehurst, et al., 73 Fla. 152, 74 So. 205, that in the event an official threatens an unlawful act, the public by its representatives must institute the proceedings to prevent it, unless a private person can show a damage peculiar to his individual interests in which case equity will grant him succor.

The court returned to its decision in Rickman v. Whitehurst, 73 Fla. 152, 74 So. 205 (1917) to reiterate its requirement that a taxpayer seeking standing allege a “special injury” or a “constitutional challenge” is consistent with long established precedent.

This decision was not without dissent. Justices Ehrlich and Shaw dissented with a strong explanation. In part the dissent pointed out that Doherty decision was not even a tax case. Justice Ehrlich asserted that the Fornes' majority simply misread the precedent when it held that an illegal public action that raises the taxpayer obligation or wastes public money cannot constitute the necessary “injury” which authorizes a taxpayer suit.

Ehrlich and Shaw’s dissent relied upon Florida Supreme Court precedent predating Doherty in Chamberlain v. City of Tampa, 40 Fla. 74, 23 So. 572 (1898) which specifically allowed a taxpayer suit. The dissent appears to rightly distinguish Doherty stating the facts “…..involved a land-use decision which converted a pathway used by pedestrians and cyclists to private ownership. …….This case did not involve illegal expenditures of tax revenues.” However, the most important part of the dissent is captured in this comment of frustration by Justice Ehrlich:

The majority buttresses its action by claiming it to be a matter of public policy. There is a certain irony in that argument. The legislature, that body responsible for the determination of public policy, has given the citizens of the state the broadest possible rights of access to government through the Sunshine Act and the Public Records Act. Thus, while the legislature mandates the citizen's right to know just how and to what extent the public trust (and the public coffers) are being violated, this Court holds that public policy requires that we deny them the power to do anything about it.

A fairly recent decision by the Third District distinguished the issue of standing by a taxpayer from the standing jurisprudence of a voter in City of Hialeah v. Delgado, 963 So.2^nd 754 The court observed:

The City misapprehends the difference between taxpayer standing and standing in election law cases. The present case is a challenge by a voter to ballot language, not a challenge by a taxpayer to a governmental spending decision. The trial court was entirely correct in ruling that Delgado had standing as a citizen and voter

Perhaps it is time to think of taxpayers as voters.

About the Firm: Formed in 1991, the Law Offices of Moffa, Sutton, & Donnini, P.A. is a law firm with a primary practice area of Florida tax controversy and a heavy emphasis on Florida sales and use tax. With offices in Fort Lauderdale, Tampa, and Tallahassee, the firm defends business owners against the Florida Department of Revenue from the initial audit notice through administrative protest and litigation as well as collections, revocations, and criminal investigations.

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